Date of Award

Spring 2017

Degree Name

Bachelor of Science

Major

Economics

First Advisor

Mark Stater

Abstract

Researchers have tried to determine reasons for the growing income inequality in the OECD countries, but human capital is not a reason typically addressed. This paper empirically seeks to determine a relationship between human capital and income inequality using multiple regression analysis. I hypothesize a negative relationship; meaning increases in the independent variable, average human capital in a country, will cause a decrease in the dependent variable, income inequality due to the idea that increases in education should increase the incomes of the poor more than those of the rich. Income inequality will be measured by the Gini coefficient and human capital by average educational attainment. I intend to control for additional independent variables that could affect income inequality such as GDP growth, government spending on education, economic freedom, corruption, and multifactor productivity. Through OLS and fixed effects estimation techniques, I find that a negative relationship between human capital and income inequality possibly exists. Thus, human capital can play a role in fighting against the growing income inequalities in the OECD countries.

Comments

Senior thesis completed at Trinity College for the degree of Bachelor of Science in Economics.

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